Friday, September 9, 2011

Escalation of the anti-people offensive

Statement of the Political Bureau of the CC on the capitalist economic crisis and the debt

  1. The unprecedented escalation of the offensive against their income and rights which the people are experiencing is not due to the real inflation of the public debt. The political line of the “continuous memorandum” is being implemented in all the EU member-states. This leads the people to both relative and absolute destitution and ensures cheaper labour power, accelerates the accumulation and concentration of capital.

The deeper goal of the escalation of the anti-people offensive is the reinforcement of the competitiveness of the European monopoly groups in the international capitalist market, where the inter-imperialist competition is apparent. All the member-states of the EU enrich the National Reform Programme and the Stability Pact with harsh new anti-people commitments, which directly specialise the directions of the Euro-Pact.

In France, ιn Britain, in Austria the retirement age and social-security contributions of the workers are on the increase. In Italy, in Spain, in Ireland unfair indirect taxes have increased dramatically. In Austria, in Poland, in Romania, in the Czech Republic, in Ireland, the salaries of the workers are being significantly reduced as well as the number of public sector employees.

  1. The workers are not responsible and must not pay for the public debt. The propaganda of the capitalist power attempts to obscure the real causes of the inflation of the public debt such as:

    1. The fiscal management of the governments of ND and PASOK to the benefit of the monopoly groups in the post-dictatorship period. Basic common characteristics are the legal tax cuts for the profitability of big capital, extensive tax evasion and the goldmine of state support for the business groups (development laws, national participation in the 2nd and 3rd CPS and more generally in EU funding etc). That is to say, during all the previous years, the state borrowed in order to serve the needs of the profitability of capital and now it is calling on the workers to pay.

The public debt dramatically increased during the period of the first PASOK government from 26.9% of GDP in 1981 to 64.2% of GDP in 1989. In the period 1981-85 the government followed a social-democratic form of management with the aim of assimilating a section of the workers through clientelist hiring to the public sector, the nationalisation of problematic private businesses etc

Later on there were measures of a restricted fiscal policy for the workers, while there was a continuation of the scandalous state support of the business groups through state subsidies, the allocation of public works, outsourcing, public-private partnerships, with the most glaring example being the counterproductive state funding of the Olympic Games in 2004. The public debt from 97.4% of GDP in 2003 reached 106.8% in 2006.

B) The massive spending on armament programmes and missions (e.g. Bosnia, Afghanistan), which do no serve the nation’s defense but the plans of NATO. A characteristic example is that in 2009 Greece’s military spending was 4% of GDP, in comparison to France’s 2.4% and Germany’s 1.4%.

C) The consequences of the Greek economy’s assimilation into the EU and the EMU. An example of this is that significant sectors of manufacturing have been on a course of shrinking which have been on the receiving end of strong competitive pressure and have been reduced (e.g. textiles, clothing, metal, shipbuilding industry and the manufacture of other means of transport). The expansion of the trade deficit and the rapid increase of imports from the EU had a corresponding impact on the inflation of public debt. The trade deficit has been transformed from 4% of the GDP from 1975-80, to 5% in 1980-85, to 6% in 1985-1990, to 7% in 1990-95, to 8.5% in 1995-2000, and it exploded to 11% of the GDP in the decade 2000-2010, with the accession of the country to the Eurozone. The Common Agricultural Policy led to the agricultural balance of payments, from a surplus of 9 billion Drachmas in 1980, to a deficit of 3 billion Euros in 2010, transforming the country into an importer of food products. The deterioration of the trade deficit was followed by the “external” balance of payments (balance of current accounts), that is to say the overall “annual fund” of the country with other countries, which from a surplus of 1.5% in 1975-80, was transformed into a 0.9% deficit in 1980-1990, the deficit increased to 3% of GDP in 1990-2000,. This deficit exploded with the accession of the country to the Eurozone to an annual average which exceeds 13% of the GDP in the decade 2000-2010, leading to an increase of state borrowing to service the external balance of payments. The profitable activity of ship-owning capital did not reverse this situation.

The reduction of interest rates on loans after the accession to the EMU also had an impact by facilitating the increase of public borrowing of the Greek government to the benefit of big capital.

The high rate of development, on average 2.8% during the decade 2000-10, was the mortgage of the working class and popular income which we are paying today. Of course this process is not exclusively Greek. The increase in the trade deficit of the USA in the decade 1997-2007 is also connected to the increase of the annual public deficit and of course to the public debt.

D) The lending terms (interest rates, duration, conditions of repayment) led to the increase of the interest from 9 billion Euros annually at the beginning of the decade, to 15 billion Euros in 2011, while certain studies place the overall spending (interest and amortization) which serve the public debt at 21.3% of the GDP in 2000 to 40% of the GDP in 2010.

E) The impact of the capitalist crisis on the Greek economy.

The outbreak of the crisis contributed to the increase of the annual public deficit and the inflation of the public debt. On the one hand through the reduction of tax income due to the reduction of economic activity ( e.g. reduction of turn-over, closure of businesses, increase of unemployment etc) and on the other hand due to the new state support packages for the banks and other monopoly groups. The impact of the crisis on the inflation of the public debt can be seen throughout the whole of the EU, as in the last four years the overall debt increased by 34%.

3. It has been demonstrated that the anti-people political line of bourgeois power in Greece, in coordination with the strategy of the EU, amongst other things has increased the debt burden of the country. It has also been demonstrated that no variation of bourgeois management can cancel the manifestation of the crisis of over-accumulated capital, nor can it create a pro-people way out from it. The fraudulent promises of PASOK are being shattered by the reality of the economic crisis which is deepening.

a) In the first quarter of 2011, the reduction of the GDP reached 5.5% in comparison with the same period in 2010. The Greek economy will not even return to its pre-crisis levels next year in 2012.

b) After the implementation of Memorandum 1, the public debt has already increased from 127.1% of GDP in 2009 to 142.8% of GDP in 2010.

The problem of the public debt does not only concern its level, but the increased spending for its servicing, which in the final analysis determines the inability of a state to pay, i.e. bankruptcy. The government policies as expressed by Memorandum 1 and the Medium-term Programme increase spending on interest and amortization for the immediate future. According to the assessments of the European Commission itself, spending on interest will reach 9.6% of the GDP in 2015, compared to 6.8% of the GDP today. In 2009 spending on interest and amortization was 12 billion and 29 billion Euros correspondingly, in 2010 13 billion and 20 billion Euros, while dramatic increases have been predicted for the coming period, 16 billion and 36 billion Euros in 2011, 17 billion and 33 billion Euros in 2012, in 2013 20 billion and 37 billion Euros, in 2014 22 billion and 48 billion Euros, and in 2015 23.4 billion Euros and 33 billion Euros.

Even bourgeois economists admit (e.g. the head of the Macroeconomic Institute IMK in Germany) that the plan to reduce the debt through the Memorandum and the suffocating austerity measures lead to a vicious circle of increasing public debt and recession.

As was admitted officially by the President of the European Council Van Rompuy, the anxiety over the management of the public debt of the indebted EU states concerns the reinforcement of the Euro as an international reserve currency and the future of the Eurozone as a whole, due the high level of interdependency of the economies. The safeguarding of the Eurozone and the major lending groups is the reason, despite the significant intra-bourgeois contradictions, there was to begin with agreement on the European Stability Mechanism and the payment of the installments of the loans to the indebted countries.

What worries the imperialist centres is not so much the size of the Greek debt, but the difficulty of managing the chain reaction in countries such as Spain and Italy, always with the goal of salvaging the financial system, which is a fundamental mechanism for capitalist accumulation.

4. While the workers are already on the road to bankruptcy, relative and absolute destitution, the member-states of the EU and the strong groups from the financial sector are negotiating for a course of controlled bankruptcy for the Greek economy. The struggle concerns the distribution of the losses, the distribution of the necessary depreciation of capital, while they all agree on the escalation of the anti-people offensive.

The plan to restructure the debt which is being proposed by the Union of French Banks (FBF) provides for the transformation of 50% of the current bond debt to new 30 year bonds, with an extortionate interest rate ranging from 5.5 % in period of crisis to 8% in a phase of high capitalist development.

Different variations of state plans (e.g. Germany’s) propose that the owners of state bonds (banks, institutional investors etc) accept a time extension for the repayment of a part of the Greek state bonds, with in exchange a high interest rate and as motivation the avoidance of the losses which they would have had if the Greek state had immediately gone bankrupt. The German and French governments seek to minimize their state participation in the support mechanism of the indebted states and to transfer a part of the burden of the restructuring onto creditors-banking groups.

The ECB and the European banking groups are pressing so that the partial cancellation of the debt does not occur at their expense. They are not satisfied with the offer of a high interest rate, because they consider the repaying of the debt unlikely; they question the likelihood of whether the proposed plans will succeed.

The restructuring of the debt is being promoted by American circles, which intervene in the Euro-Dollar competition, as international reserve currencies. Now a race is going on between the French and German banks to get rid off Greek state bonds and load them on to the European Central Bank to begin with. Germany is utilizing the negotiations to pose the dilemma “stricter harmonization of economic policy in the whole of the Eurozone or a narrower and more compact Eurozone.”

5. In any case, the workers can expect nothing positive from the outcome of this particular struggle. Whatever the result of this struggle between various sections of capital and imperialist states, the offensive of the ruling class will continue and escalate in order to ensure cheaper labour power, the acceleration of the restructurings and privatizations, the selling off of public property to the monopoly groups.

Especially in relation to the repaying of the public debt the various bourgeois proposals only differ as to when and how the workers will foot the bill. E.g. With the extension of the period for the repaying of the bonds, the workers will pay more over a longer period of time (if the interest rate remains stable and even more so if the interest rate increases).

But even if an immediate reduction of the high level of debt of the Greek state is achieved, this will simply lead to new tax exemptions and state backing for big capital and not measures to satisfy the needs of the people. It will pose yet again the process of increasing the debt. The dilemma of the process is not a real one for the peoples’ forces. Moreover, the state revenues are sufficient to pay the salaries and pensions. They are not sufficient for the creditors. The gross revenues of the regular budget were 48.5 billion Euros in 2009 and 51.1 billion Euros in 2010, while spending on salaries-pensions- subsidies to the social- security funds was 42.3 billion Euros in 2009 and 37.9 billion Euros in 2010. The payments on the interest alone were 12.3 billion in 2009 and 13.2 billion in 2010.

Today, at the same time when the government is invoking the danger of bankruptcy, it continues to provide support packages to the banks, its exorbitant military spending for NATO, it reduces taxation on undistributed profits etc. The guarantees of the Greek public sector to the banks during the crisis have reached 108 billion Euros. In 2010, Greece bought six frigates from France (2.5 billion Euros) and six submarines from Germany (5 billion Euros).

The workers must not expect any pro-people way out from the processes which are related to the formation of a new more effective management formula and the achievement of a new temporary compromise between sections of the bourgeois class and within the imperialist alliances. All have endorsed the Pact for the Euro (the Covenant of Competitiveness) and the strategic directions of “Europe 2020” which aim at securing cheaper labour power in the EU, to reinforce the monopolies in the competition in the international market.

All promote the “liberalization” of strategically important sectors (energy, telecommunications etc), restructurings, so that they find a suitable outlet for the satisfactory profitability of the over-accumulated capital, which are today stagnating in the EU.

For this reason, “New Democracy”(ND) has voted for 38 governmental bills and LAOS voted for Memorandum 1. For this reason, ND and PASOK can hold discussion about joint governments, as they have the programmatic basis for it, the “continuous memorandum” which will apply to all the EU member-states. For this reason their sister parties jointly support the anti-people offensive against Portugal and Ireland.

For this reason, ND demands the acceleration of the implementation of the basic goals of the Medium-term Programme and voted for the majority of the clauses concerning privatizations, the sale of public assets, the lifting the restrictions on private investments which protect the environment, the reduction of salaries in the public sector which will contribute to their further decrease in the private sector.

The “renegotiation” which ND demands is related to new measures to strengthen big capital, such as the new reduction in the rate of taxation on undistributed profits, at a time when PASOK has already lowered it 20% and in Germany the level is 30%. It is related to the new state support packages which will lead to a new bleeding of the people’s income and the exemption of businesses from the employer contributions to the social security funds.

The positions of Synaspismos/European Left Party concerning the separation of the public debt into legal and illegal–onerous sections as well as concerning the possibility of a transformation of the EU in favour of the people are deeply mistaken. These positions leave the door open for the people to pay for the crisis and the biggest part of the “legal” public debt for which it has no responsibility. The positions concerning a pro-people transformation of the EU and a European federation conceal the class content that the imperialist interstate alliance of the EU objectively has. Irrespective of the form that the EU will take, its reactionary strategy against the working people and its involvement in imperialist interventions and wars cannot change.

Various components of the opportunist current seek to deceive the people arguing that there allegedly exist painless solutions which are in its interests without a direction of conflict and rupture with the power of monopolies. Various components of SYRIZA and ANTARSYA (opportunists’ coalitions) promote the exit from the Eurozone and the cancellation of the debt without touching the power of capital as a pro-people solution and a link for an anti-capitalist rallying of forces. In addition, certain “national-patriotic” forces talk about leaving the Eurozone and remaining in the EU. Thus, the inflated public debt and the accession to the Eurozone are misleadingly presented as the main causes of the offensive against the people. Thus, the demolition of workers’ rights both in the states outside the Eurozone, such as Sweden and Britain as well as in Germany which is not heavily indebted proves that the main culprit is the capitalist path of development as a whole. The line of struggle that the opportunist current promotes is in fact an alternative form of management within the framework of the system which -in the best case- can contribute to a temporary recovery of capitalist profitability. Nevertheless, even if the restoration of a higher rate of capitalist development is achieved this does not go hand in hand with the people’s prosperity but runs contrary to it. The examples of Argentina and Ecuador prove that the cessation of payments and the currency devaluation were followed by new sacrifices of the working people in order to reinforce the competitiveness of the economy and boost exports.

The solution for the workers is not to return to the past, to the protectionism of the capitalist economy at a national level but to move forward to people’s power, to socialism.

The opportunist proposals are embellished with the misleading appeal to the people calling it on to overthrow the occupation of the IMF and troika. Thus, they hide the active role of the Greek ruling class in the offensive against the rights and the income of the people. They conceal the interweaving of national and international capital. They present the concession of certain sovereign rights by the ruling class, which serves the reinforcement of its power and the safeguarding of its profitability, as a new phenomenon.

The workers must struggle against the economic dominance of the monopolies, the capitalist state and the imperialist alliances, such as the EU. They should not be trapped into the impasses and the dilemmas of capitalist power.

The people must organize its counterattack in order to repel the worst. Its coordinated activity should spread everywhere rejecting every form of bourgeois management. It should demand that big capital pays for the social security funds and not the people’s families. It should come into conflict with the political line that demolishes labour and social security rights, reduces salaries and enables the direct utilization of public property by the monopoly groups.

The people must act so as to change the correlation of forces everywhere, it should struggle along with the KKE in the unions, in the trade union movement, it should be organized against the capitalist institutions which oppress and exploit it. Only in this way can the weakening of every capitalist government begin, of every parliamentary majority as well as the conflict with the laws and the violence of exploitation.

The time has come for the capitalist class and its political staff that use the bogey of bankruptcy to feel true fear. If the government actually resorted to borrowing because it cannot pay salaries and pensions then the overthrow of the monopolies power must be accelerated. The development path of the people’s economy, socialism can pay salaries and pensions utilizing the rich domestic natural resources, canceling the debt and establishing international agreements of mutual benefit through the disengagement from the EU and NATO.

So there is a solution: “disengagement from the EU and cancellation of the debt with people’s power”.

It is time for the labour movement to come together with the radical movement of the self-employed and the farmers with a line of struggle that will have as its final outcome the sweeping away of the rotten and bankrupted system of exploitation.

Athens 15/7/2011

Political Bureau of the CC of the KKE

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